Gilead (GILD) Q1 Loss Narrower Than Expected, Sales Beat

Gilead Sciences, Inc. GILD reported better-than-expected results in the first quarter, as its loss was narrower than expected and sales beat estimates.

GILD’s first-quarter adjusted loss per share of $1.32 per share was narrower than the Zacks Consensus Estimate of a loss of $1.49. In the year-ago quarter, the company reported adjusted earnings of $1.37 per share.

The year-over-year decrease was due to an acquired in-process research and development (IPR&D) charge of $3.9 billion, or $3.14 per share, related to the acquisition of CymaBay Therapeutics, Inc.

Total revenues of $6.7 billion beat the Zacks Consensus Estimate of $6.4, primarily due to higher HIV, Oncology and Liver Disease sales.

The stock is trading up in response to the results.

Gilead’s shares have lost 19.4% year to date compared with the industry's decline of 9.3%.

Zacks Investment Research
Image Source: Zacks Investment Research

Quarter in Detail

Total product sales were up 5% to $6.6 billion. Excluding Veklury, product sales increased 6% to $6.1 billion.

HIV product sales grew 4% year over year to $4.34 billion, driven by higher demand. The figure beat both the Zacks Consensus Estimate of $4.3 billion and our model estimate of $4.2 billion.

Flagship HIV therapy Biktarvy’s sales increased 10% year over year to $2.95 billion, due to higher demand in the United States, Europe and other international markets. The reported number beat both the Zacks Consensus Estimate of $2.9 billion and our model estimate of $2.8 billion.

However, Descovy (FTC 200 mg/TAF 25 mg) sales decreased 5% year over year to $426 million due to lower average realized price owing to channel mix. The top line also missed the Zacks Consensus Estimate of $476 million and our model estimate of $460 million.

The Liver Disease portfolio sales, which include chronic HCV, chronic hepatitis B virus and chronic hepatitis delta virus, increased 9% to $737 million. The increase was attributable to higher demand of drugs, favorable inventory dynamics and the timing of HCV purchases by the Department of Corrections in the United States.

Veklury sales decreased 3% to $555 million, primarily driven by lower rates of COVID-19-related hospitalizations as the winter wave peaked earlier than expected in the United States and Europe as compared to other regions such as Japan. However, sales beat the Zacks Consensus Estimate of $364 million and our model estimate of $333 million.

Cell Therapy product (comprising Yescarta and Tecartus) sales increased 7% year over year to $480 million. The figure beat both the Zacks Consensus Estimate and our model estimate of $473 million.

Yescarta sales increased 6% year over year to $380 million, primarily driven by strong demand in relapsed or refractory (R/R) large B-cell lymphoma (LBCL) outside the United States.

Tecartus sales increased 13% year over year to $100 million, driven by increased demand in adult R/R B-mantle cell lymphoma and R/R adult acute lymphoblastic leukemia.

Breast cancer drug Trodelvy’s sales surged 39% year over year to $309 million, primarily driven by higher demand. Per the company, with more than 30,000 patients treated to date, Gilead plans to extend Trodelvy's reach to many more patients in the future for bladder cancer, earlier-line breast cancer settings and lung cancer. However, sales missed the Zacks Consensus Estimate of $323 million and our model estimate of $314 million.

Adjusted product gross margin declined to 85.4% from 86.2% in the year-ago quarter due to product mix.

Research & development expenses totaled $1.4 billion, which remained flat year over year. SG&A expenses amounted to $1.3 billion, which also remained flat on a year-over-year basis.

Acquired IPR&D expenses totaled $4.1 billion in the reported quarter, primarily due to the $3.9 billion charge related to the acquisition of CymaBay that closed on Mar 22, 2024.

2024 Guidance Updated

Product sales are projected to be between $27.1 billion and $27.5 billion (unchanged). Total product sales, excluding Veklury, are expected to be between $25.8 and $26.2 billion (unchanged).

Total Veklury sales are estimated to be $1.3 billion (unchanged).

However, adjusted earnings per share are now anticipated in the range of $3.45-$3.85, down from the previous estimate of $6.85-$7.25 to account for dilutive impact of the CymaBay acquisition.

Gilead Sciences, Inc. Price, Consensus and EPS Surprise

Gilead Sciences, Inc. Price, Consensus and EPS Surprise

Gilead Sciences, Inc. price-consensus-eps-surprise-chart | Gilead Sciences, Inc. Quote

Other Updates

Gilead recently acquired a clinical-stage biopharmaceutical company, CymaBay Therapeutics Inc., for $4.3 billion. The acquisition added CymaBay’s investigational lead product candidate, seladelpar, to Gilead’s pipeline.

Seladelpar is an investigational, oral, selective peroxisome proliferator-activated receptor delta agonist, shown to regulate critical metabolic and liver disease pathways. The FDA has accepted the new drug application seeking approval of the candidate for the treatment of primary biliary cholangitis (PBC) and granted priority review to the same with a target action date of Aug 14, 2024.

Gilead announced a research collaboration, option and license agreement with Merus N.V. to discover novel antibody-based trispecific T-cell engagers in oncology.

The company also entered into an exclusive license agreement with Xilio Therapeutics, Inc. XLO. Per the agreement, Gilead will develop and commercialize Xilio’s tumor-activated IL-12 program, including investigational candidate XTX301 in advanced solid tumors.

Pipeline Updates

The FDA approved a label expansion of Biktarvy’s label to include the treatment of people with HIV who have suppressed viral loads with known or suspected M184V/I resistance.

The regulatory body also approved a label expansion of Vemlidy (tenofovir alafenamide) to include the treatment of chronic HBV in children aged six years and older who weigh at least 25 kg with compensated liver disease.

Our Take  

Gilead’s first-quarter results were pretty ho hum. Biktarvy remained the leading regimen for HIV treatment across major markets for new starts as well as for those switching regimens. Approval of better HIV treatments should strengthen the HIV franchise in the wake of the increasing competition.

Gilead expects to launch lenacapavir by late next year as the first and only twice-yearly subcutaneous prevention option.

While Veklury sales declined year over year due to the evolution of the pandemic, sales were better than estimates, providing upside to sales.

The oncology business continued to perform well and the label expansion of Trodelvy in metastatic bladder cancer should further boost the franchise.

Zacks Rank & Stocks to Consider

Gilead currently carries a Zacks Rank #3 (Hold).

A couple of better-ranked stocks in the biotech sector are ADMA Biologics, Inc. ADMA) and ANI Pharmaceuticals, Inc. ANIP, both sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, estimates for ADMA Biologics’ 2024 earnings per share (EPS) have improved from 22 to 30 cents. Shares of ADMA have rallied 40.9% year to date.

ADMA’s earnings beat estimates in three of the trailing four quarters and met the same once, delivering an average surprise of 85.00%.

In the past 60 days, estimates for ANI Pharmaceuticals’ 2024 EPS have improved from $4.12 to $4.43. Shares of ANIP have jumped 17.3% year to date.

ANIP’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 109.06%.

 

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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